Personal Bankruptcy on The Increase

The administrative office of the U.S. courts has finally released bankruptcy report for the first quarter of 2007. The document shows a continuous and consistence rise in the number of bankruptcy filing in the United States. The document put the first quarter filing at 193,641.

Besides the first quarter report, the preliminary report for September 2007 revealed something more to think about. It shows that September has the highest filings since October 2005. A total of 67,386 filed for personal bankruptcy in nineteen (19) business days in the United States. Numerically though, August seems to have the highest rate, but then taking ratio to number of business days shows that September had an average of 3,541 filings per day, giving September the highest filing per day in the post October 2005 bankruptcy reports.

The months following October 2005 saw a very sharp decline in the rate of filing. This was well reported by newspapers nationwide, celebrating what seems to be a bye-gone era for personal bankruptcy.

Why the steady increase currently experience? Better still why did filing plummet after October 2005? Or lets put it this way: will we ever stem the tide? Well, experts hold divergent opinion on why filing decline after October 17, 2005. They differ on what might be the real reasons for the sudden decrease after the reformed bankruptcy law went into effect.

In the real sense of the word, were there any decreases in personal bankruptcy? The answer is no! We experienced decline in filing rate though, but there was no decline in bankrupt or potentially bankrupt individuals. The months proceeding October 2005 saw a great upsurge in filing because people who had been hitherto leaving on the edge had to make “hails while the sun shine.” They simply make use of the opportunity the old law presented. This account for the unprecedented increase in filing under the “old system.”

This significantly depleted the number of filings that were recorded after October 2005 and it ran through early part of 2006. The law that came into effect made the process of filing more tedious, expensive, and time wasting. As rational economic human then, there must be an initial retreat as a result of the shock that always accompanies major policy changes or law amendments of that class. From human experiments on the surface of the earth, such a retreat or withdrawal don’t last. Sooner or later, people get acclimatizes to the process, they adapts and return to “statos quo.”

The law addresses the processes and procedures involves in filing and the presumed benefits to the filers. It never address question such as: why do people go bankrupt? Such issues as interest payable on credit cards, mortgage loan interest, mounting transportation cost, upsurge in medical bills and related subjects. It also fails to comment on attitudes and lifestyles that drive people toward a bankrupt state. Does the reformed law comment on the health-care cost for smoking related illnesses? Is there any chapter or section in the law that estimates the lifetime health-care cost of palates and cleft lips, which illnesses result from smoking mother? Did the reformed law bankruptcy law address gambling? I am sure it did not address drug abuse, abuse of alcohol, promiscuity and related unhealthy lifestyles that drive people today towards a defunct financial states and eventual bankruptcy.

Of course is not up to lawmakers to recommend how individual should live their lives, and never will they! A law is not a document of social etiquette. Nonetheless, the questions raised above merit major consideration if we do not want to open the unwanted page. So can we realize our dream of a less bankrupt society?